Disney’s Streaming Business Set to Turn Profitable This Summer as Losses Shrink
In a major development for The Walt Disney Co., the company has confirmed that its streaming business is on track to become profitable this summer. The division has seen a significant reduction in losses, thanks to higher revenue per user and effective cost management strategies.
Facing proxy fights with activist investors Nelson Peltz’s Trian Partners and Jason Aintabi’s Blackwells, Disney revealed that its streaming business incurred a loss of $216 million in the quarter, down from $387 million in the previous quarter and over $1 billion a year ago.
Despite a slight decline of 1.3 million subscribers at core Disney+, which the company attributes to a price hike during the quarter, Disney expects a surge in subscribers in the next quarter, projecting numbers between 5.5 million and 6 million. The average revenue per user (ARPU) has improved due to the price increase and enhanced performance from the ad-supported tier of Disney+. Additionally, Hulu witnessed a rise in its subscriber base by 1.2 million.
During the earnings call, Disney CEO Bob Iger took the opportunity to make several significant announcements ahead of the company’s annual meeting in April. These included a partnership with Epic Games, involving a $1.5 billion investment to bring Disney franchise intellectual property to the Fortnite universe. Furthermore, fans can look forward to a surprise sequel to the popular film Moana, set to hit theaters later this year. In addition, Disney+ will be streaming Taylor Swift’s Era’s Tour movie next month. ESPN’s direct-to-consumer flagship service is also slated for a fall 2025 launch.
Overall, Disney reported revenue of $23.5 billion, matching figures from the previous year. However, diluted earnings per share increased to $1.22, exceeding Wall Street expectations, and operating income reached $3.9 billion.
The entertainment division generated revenues of $10 billion, with an operating income of $874 million. The sports division saw revenues of $4.8 billion but incurred operating losses of $103 million. The experiences division reported revenue of $9.1 billion, with an operating income of $3.1 billion.
Disney also announced a significant dividend hike and a $3 billion share repurchase program. Furthermore, the company provided guidance, assuring investors that earnings per share in 2024 would improve by 20 percent, with projected free cash flow of $8 billion for the year.
Reflecting on the company’s performance, CEO Bob Iger stated, “Just one year ago, we outlined an ambitious plan to return The Walt Disney Company to a period of sustained growth and shareholder value creation. Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our Company, focused on fortifying ESPN for the future, building streaming into a profitable growth business, reinvigorating our film studios, and turbocharging growth in our parks and experiences.”
With this positive outlook, Disney is poised to continue its upward trajectory and solidify its position as a leader in the entertainment industry. Stay tuned for more exciting developments from the company.